The appropriate monetary policy in the event of a recessionary gap would be to
A) raise the required reserve ratio.
B) increase the difference between the federal funds rate and the required reserve ratio.
C) engage in an open market purchase of U.S. government securities.
D) increase the difference between the discount rate and the federal funds rate.
C
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Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods, but trade can still benefit both people
What will be an ideal response?
Consider two resource markets in which the demand curves slope downward. In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired. In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired. Which of the following is true?
a. All of the resource earnings in market A are economic rent. b. All of the resource earnings in both markets are economic rent. c. All of the resource earnings in market B are economic rent. d. None of the resource earnings in either market is an opportunity cost. e. None of the resource earnings in either market is economic rent.